In DI, Its Full and Accurate Disclosure Of Ailments That Counts

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The vast majority of disability income claims are resolved easily and with little fanfare. However, public attention tends to focus on the difficult, litigious and declined claims that sometimes occur.

The discrepancy between the two trends presents challenges for agents.

All too often, as insurers try to sort out legitimate from bogus claims, we agents find ourselves struggling to balance our relationship with the insurer and our relationship with the insured. This isnt always easy to do.

However, if we fulfill our role properly, the claims process can go much easier and our clients will be more certain to receive the benefit they purchased.

What is it that we should do, to assure that the claim goes smoothly? There are certain key steps that are most likely to help–steps we should take before the event as well as after. In fact, I believe the agents most vital role in this area is what he or she does before coverage is ever placed.

You see, when selling a disability income policy, the biggest favor an agent can do for the client is to establish the need for honesty.

Certainly, it is possible–even easy–for a client or agent to omit an ailment and not have it discovered during underwriting. That can happen even when a companys best underwriter is on the case.

Without question, a client may end up with a better underwriting offer this way. But incomplete apps set the stage for problems down the road, for it is almost certain the undisclosed ailment will be uncovered in a claim investigation, even several years later.

Remember, claim files are loaded with physician records, reports from the Medical Information Bureau, questionnaires and numerous other pieces of investigation material used to make claim decisions. Even if the omitted ailment is not directly associated with the claim, any purposeful misstatement on an application can be grounds for denial.

Is it worth the risk, then, to withhold such medical details? I think not.

Yes, full and accurate disclosure may lead the insurer to add a rider to the DI contract or to offer a DI policy that is more expensive than the one sought. But your careful documentation up front means that the benefits will be there for the client, when needed.

The second favor an agent can do for the client is to take a good application. The majority of difficult DI claims, and for that matter, lawsuits brought against agents and carriers, occur because the agent was simply sloppy and/or inaccurate.

Such oversights are often made without intent to mislead. After all, completing an app is tedious, invasive, and sometimes just plain confusing, and no one enjoys it. Mistakes can happen.

However, the application is the snapshot of your client that a company uses to determine coverage. In most cases the application will become part of the insurance contract and will be used to determine various aspects of benefit eligibility.

Therefore, taking a complete, accurate and legible application is the single best start to an easy claims process.

After a disability occurs, you can best serve your client by keeping the process moving. Illness, depression and fear can cripple a clients judgment. If possible, you should help your client to notify the company of the disability as soon as possible.

If the carrier asks for a complete claim form, make sure your client complies–even if he or she is not certain the illness or injury will last for the entire elimination period.

Also, make sure the client and, to any extent possible the doctor, respond quickly to questions and other information requests. The more swiftly the process proceeds, the sooner the client will receive benefits.

Lastly, at time of claim, the agent should serve as an advisor, not an advocate.

This is an important distinction. Agents often feel a need to get directly involved in the claim. Although this is often done with the best of intentions, too much agent involvement is likely to hurt the process–because it can hinder the flow and accuracy of information between client and claim representative.

It is also possible that, with an agent involved, a client may continue to withhold information out of embarrassment or other concerns.

Therefore, if a client has a grievance over the process or the insurance companys decision, the clients attorney is the persons best advocate, not you the agent.

Your value to your clients is your knowledge and expertise. From selecting the best product to facilitating a claim, you are an invaluable resource.

This means you should focus on these things: Know what you are selling to your client; know what risks you are selling to the carrier; and always write everything down.

If you do your job well, handing a disabled client the first benefit check will be the most rewarding experience of your career.

is vice president of The Hanleigh Companies, Dubuque, Iowa, product manager of its impaired risk disability policy, and president of the Disability Income Advisor and Consumer Association. His e-mail is bparks@hanleigh.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, November 12, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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